Stakeholders have expressed high hopes that the automotive industry will recuperate this year as economic turbulence is expected to ease throughout 2020.

With such an outlook, the chairman of the Association of Indonesian Automotive Manufacturers (Gaikindo), Jongkie D. Sugiarto, said that the association had increased its sales target by 5 percent to about 1.05 million cars in 2020 from 1 million cars in 2019.

The industry sold about 1.03 million units between January and December 2019, down by about 10.8 percent compared to the 1.15 million units sold in 2018, according to data provided by the association. This indicates that the industry had met its target of 1 million sales by the end of 2019.

“With economic growth of 5.1 to 5.2 percent, we are confident that we will achieve our 1.05-million target,” he added, quoting recent government estimates. “If the government is optimistic, why shouldn’t we be?”

Indonesia’s economic growth was 5.02 percent in the third quarter, the lowest level in more than two years amid weak investment and export performances. The 5.02 percent growth rate in Q3 was lower than the 5.05 percent growth rate in the second quarter of last year and the 5.17 percent growth rate in the third quarter of 2018. As of the third quarter, the economy has grown 5.04 percent.

Aside from economic growth, the rupiah’s fluctuation against the US dollar and lending interest rates could also influence people’s buying power for vehicles, which Jongkie hoped would improve in 2020.

Nevertheless, the industry’s recovery would give a much-needed boost to the sluggish manufacturing sector, which relies on the automotive industry among a number of sectors to bolster its growth, Institute for Development of Economics and Finance (Indef) researcher Heri Firdaus said on Wednesday.

Such optimism contrasts with Gaikindo’s stance in 2019. Last year, the association revised its full-year target down to 1 million cars from 1.1 million cars given the disappointing sales in the first half.

Jongkie said in September last year that the presidential and legislative elections in April 2019, had contributed to the decline in the car sales during the period between January and July 2019, which saw a year-on-year decrease of about 12 percent.

In December 2019 alone, the data recorded total sales of 86.582 units or 1.4 percent less than the 87,846 units sold in the previous year. Jongkie said in November last year that sales were usually down in December due to the holiday season.

Indonesia’s largest automotive company group, Astra International, also recorded a slump in its sales. The group was only able to sell 536,402 cars in 2019, a 7.9-percent decline from the 568,967 cars sold in 2018.

Astra International corporate communications head Boy Kelana Soebroto said the whole industry had suffered a similar decline, caused by weak household spending and falling commodity prices like coal, which led to sluggish commercial car sales.

Boy said Astra would follow Gaikindo’s car sales target for 2020 so that it would be able to retain its market share at 50 percent in the domestic market in 2020. The company had 52 percent of the market by the end of last year, up from 51 percent in 2018.

“Astra seeks to maintain the four-wheel market share of 50 percent through various efforts, including by releasing new products and maintaining the quality of the after-sales service,” Boy said. The group had released 14 new models and seven “revamped” models as of September 2019, he added.

Toyota, one of the group’s keystone brands, continues to be the best-selling brand despite decreasing sales. Toyota’s car sales fell to 333,222 units in 2019 compared to the 353,471 sold in the previous year.

Daihatsu was the second-best-selling manufacturer in 2019, followed by Mitsubishi. Daihatsu sold 177,284 units in 2019, less than the 202.738 units sold in 2018, while Mitsubishi car sales fell to 161,765 units last year from 194,331 units in 2018.

Automotive expert Agus Tjahajana said Gaikindo’s 1.05 million target was realistic, considering the election was over and the United States and China would likely sign a deal that would ease trade tensions, which could positively affect the domestic auto industry.

However, as the US-China deal’s positive effects would take time to appear, Agus estimated the impact would be felt in the third quarter of this year. Oil prices in the Middle East could still hamper domestic consumption if they rise next year, he added.

Still, he saw great potential for the sector’s growth moving forward. He estimated the production capacity to be about 2 million cars per year while household spending was expected to improve.

“There’s light at the end of the tunnel,” Agus said. “We endured every suffering last year, so what more could there be?”

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